US Battery Maker A123 will get up to $450 million Wanxiang Group Corporation for up to 80% of the shares

A123 Systems, a developer and manufacturer of advanced lithium-iron phosphate batteries and systems, signed a non-binding memorandum of understanding (MOU) with Wanxiang Group Corporation establishing the framework for a strategic investment through which Wanxiang would invest up to $450 million in A123.

A123 announced the Wanxiang deal along with its financial results for the second quarter ended 30 June 2012 in which the company reported a net loss of $82.9 million (a 50% increase in loss compared to a net loss of $55.4 in 2Q 2011) on total 2Q 2012 revenue of $17.0 million (a decrease of 53% from $36.4 million in the second quarter of 2011).

Wanxiang is China’s largest automotive components manufacturer and one of China’s largest non-government-owned companies.

In early 2012, A123 Systems announced to replace defective battery packs and modules supplied to about five customers, including Fisker Automotive. The defect caused a Fisker Karma to shut down in a Consumer Reports test. It estimated the recall would cost about US$55 million. Fisker reduced its purchase order of battery from the company to lower its inventory. Cylindrical cells made in China that are used by BMW and others are not affected